Fighting Corruption in Wartime Ukraine

Even when the country is at war, the Ukrainian political calendar proceeds according to routine: a new political year starts in the last week of January. In 2023, the start of the election cycle coincided with a wave of political and legal actions connected with the fight against corruption, accompanied by a broader public discussion of this issue.

On January 21, the influential newspaper Dzerkalo Tyzhnia (Weekly Mirror) published an article by investigative journalist Yuriy Nikolov on the Ministry of Defense’s (MOD) purchases of food for the Ukrainian military. In the article, the ministry was accused of purchasing food at prices well above the usual retail prices. The investigation resulted in the resignation of Deputy Minister of Defense Vyacheslav Shapovalov, who was responsible for logistics for the army, and the firing of Bohdan Khmelnytsky, the MOD official who had signed the contract with the supplier. The MOD has continued to deny any involvement in excessive payments.

Why should allegations of misuse of funds have garnered such a fast and firm response from the administration? Two reasons appear most prominent. The Ukrainian Army is among the country’s most important institutions and is well supported by the citizenry; during war it has an existential significance for the survival of the nation. Any taint of misuse of funds threatens its vital role. And external institutional support for Ukraine, such as by the IMF and EU agencies, is linked to continued anticorruption efforts.

Zelensky’s immediate reaction to the growing suspicions of corrupt behavior was thus directed to two different audiences, showing both Ukrainian society and the country’s allies and partners that lapses in good governance would not be tolerated.

Anticorruption Campaign

Starting on January 22 and culminating on February 1, 2023, an avalanche of law enforcement activities took place that was directed at investigating the corruption cases that had piled up in 2022. On February 1 alone, tens of searches took place, along with the issuing of notices of official suspicion. To name a few:

—The Security Service of Ukraine (SSU) and the Economic Security Bureau (ESB) searched the home of Ukrainian businessman Ihor Kolomoysky on February 1, 2023. The searches were connected to the investigation of alleged tax avoidance by the companies Ukrtatnafta and Ukrnafta, of which Kolomoyskyy is a major shareholder.

—The SSU and the SBI conducted searches of the property of Arsen Avakov, former minister of internal affairs of Ukraine. The searches were connected to a contract signed several years ago with the French company Airbus and may have been prompted by the January 18 helicopter crash in which several senior members of the Ministry of Internal Affairs died.

—The State Bureau of Investigation (SBI) searched the offices of the acting head of the Kyiv tax service and the deputy head of the Main Department of the State Tax Service in Kyiv. Later these officials were suspended from their positions.

—The SBI has served a notice of suspicion to a former minister of the Ministry of Energy and Coal Industry of Ukraine, whose negligence allegedly led to public budget losses of almost 40 million USD in favor of oligarch-owned companies.

—At around the same time, counterintelligence units and investigators from the SSU revealed new information concerning the alleged criminal activities of Vyacheslav Bohuslaiev, ex-president of the Ukrainian aircraft engine company Motor Sich, who was already suspected of providing funding and support to Russian proxies and terrorists in the so-called Donetsk People’s Republic.

—Also on February 1, 2023, the SSU conducted searches at the home of Vadym Stolar, a Kyiv developer and MP. According to the law enforcers, his construction companies were involved in the legalization of funds of Viktor Medvedchuk, Taras Kozak, and other persons sanctioned by Ukraine and Western states.

—That same day, the prosecutor general's office served notices of suspicion to two officials from the MOD and Volodymyr Tereshchenko, former deputy director of the state-owned enterprise Promoboronexport (an entity engaged in the export and import of military goods and equipment).

—In a separate action, SSU officers exposed an unnamed official from the MOD’s Department of Public Procurement and Supply for allegedly embezzling public funds.

In addition to these high-profile cases, numerous other operations were carried out around Ukraine by the National Anti-Corruption Bureau (NABU), the Special Anticorruption Prosecutor’s Office (SAPO), the police, and other law enforcement and anticorruption agencies.

Domestic Results of the Latest Anticorruption Efforts

Together with the wave of law enforcement operations, the presidential team underwent some painful changes.

In a major move, President Zelensky accepted the resignation of Kyrylo Tymoshenko, deputy head of the presidential administration, and dismissed four governors who were regarded as belonging to the “Tymoshenko group.” Tymoshenko was an important member of the president’s team who provided some informal power checks and balances in the office of the president.

There followed a wave of dismissals that affected not only the administration but also the prosecutor general’s office, the cabinet of ministers, the Tax Administration, the Customs Service, the MOD, and the military administrations in several oblasts. 

The MOD has reshuffled its upper ranks. Following the scandal over purchases of food for the army at inflated prices, Defense Minister Oleksiy Reznikov, who seems to have survived the reshuffle so far, saw his position weakened; he has promised to ensure stronger control over procurements for the army.

These changes are expected to continue in February 2023 with President Zelensky’s announcement of new rounds of dismissals of “those in the system who do not meet the fundamental requirements of the state and society.”

As a result of the reshuffle, the presidential team appears to have become more united under Andriy Yermak, head of the presidential administration, whose political power grew.

Another result is the evidently greater involvement of the SSU in the fight against corruption. The anticorruption agencies created after the Euromaidan were less visible in the most recent campaign.

International Resonance

Western politicians have largely assessed these developments as an indication of the Ukrainian government’s firm intention to adhere to principles of good governance and a commitment—and ability—to fight corruption.

For example, on January 24, 2023, Democratic and Republican U.S. lawmakers praised Ukraine's government for taking swift action against corruption and insisted that U.S. military and humanitarian aid to President Zelensky's government should continue.

On January 26, 2023, Celeste Wallander, the U.S. assistant secretary of defense for international security affairs, said at a House hearing that the Biden administration “has not seen credible evidence of any diversion of U.S.-provided weapons outside of Ukraine.”

On January 31 a U.S. Treasury Department representative said the department “had no indication that U.S. funds had been misused in Ukraine” and that it would continue to work closely with Ukrainian authorities to ensure appropriate safeguards were in place to prevent diversion of funds.

Finally, on February 3, during the EU-Ukraine summit in Kyiv, EU leader Ursula von der Leyen stated that she is “comforted” to see that Ukraine’s “anti-corruption bodies are on alert and effective in detecting corruption cases.”

Western trust in Ukraine was also supported by the work of a monitoring mission. On January 27, 2023, Bridget A. Brink, the U.S. ambassador to Ukraine, posted a photograph of herself with visiting inspectors from the U.S. State and Defense Departments and USAID in Kyiv. As she wrote, the visitors were in Kyiv “to advance their independent oversight of U.S. assistance to Ukraine.”

The Struggle Continues

The struggle with corruption goes on in Ukraine. Somewhat overshadowed by the public attention devoted to high-profile incidents were several unflashy but important achievements in the country’s efforts to combat corruption.

For example, in January 2023, NABU and SAPO completed the second part of a sprawling investigation into fifteen persons suspected of operationalizing the so-called “Rotterdam Plus” formula, a legacy of former president Petro Poroshenko. Under the terms of the formula, electricity consumers overpaid oligarch-controlled companies more than 400 million USD in 2018–2019. Among those suspected of putting the formula into practice are two former heads and seven members of the National Energy and Utilities Regulatory Commission.

Or another example, this one a positive development: the National Agency on Corruption Prevention has prepared the State Anti-Corruption Program for 2023–2025, a plan that further advances a system supporting transparency in governance. It is expected the cabinet of ministers will approve it in the coming days.

Both cases show that progress is being made, slowly but surely. The Ukrainian government is gradually increasing its capacity to prevent corruption in the public sector and to undertake corrective actions when corruption is uncovered.

But measurable progress lags, undoubtedly hampered by Ukraine’s all-out fight against Russia’s war of aggression and a cadre of pro-Russia sympathizers and oligarchs used to the old ways prepared to take advantage of the difficult situation. Transparency International's recently published index of corruption perception for 2022 shows that Ukraine, despite some improvement, is still perceived as Europe’s most corrupt country and is in thirty-third position worldwide, in a space shared with Algeria, El Salvador, and Zambia.

Recent actions in Ukraine underscore a certain contrariness. On the one hand, corruption in the public sector remains, despite martial law being in effect and huge social sensitivity on this issue. On the other hand, the Zelensky administration has shown it has the political will to fight corruption. And this will is backed by the system of anticorruption institutions, which can turn rhetoric into reality.

Ukrainian society and Ukraine’s Western allies trust the leadership of the country, which is engaged in a fight on two fronts, against the Russian Federation and against internal corruption. And this trust nurtures Ukrainians’ hope for improvement on both fronts.

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.